Now groups don't have to disclose who is giving them >$5,000 to the IRS

https://www.politico.com/news/2020/05/26/dark-money-tax-283044

'Dark money' groups dodge reporting requirement in new regulations

The rules, which have been in the works for several years, will affect groups organized under 501(c)(4) of the tax code.

By TOBY ECKERT

05/26/2020 07:38 PM EDT

The Treasury Department and IRS on Tuesday finalized regulations that will excuse some politically active tax-exempt groups from having to disclose their high-dollar donors to the IRS.

The rules, which have been in the works for several years, will affect groups organized under 501(c)(4) of the tax code, which include political heavy-hitters like the National Rifle Association and AARP; labor unions; and “dark money” groups that fly under the radar.

Those organizations have no legal obligation to publicly disclose their donors' identities, but they previously had to give the IRS the names and addresses of donors who gave them more than $5,000. Under the new regulations, the groups won’t have to provide the information to the IRS at all.

Supporters of the move say the IRS doesn’t need the information and that requiring it posed privacy risks, even though the agency kept the information confidential. But opponents say it will make political activity by tax-exempt groups even more opaque and open the door to donations from foreigners.

Sen. Ron Wyden, a particularly vocal critic of the new regulations, issued a statement condemning them.

“The Trump administration has opened the flood gates to dark money pouring into our election system just months before Donald Trump is on the ballot,” Wyden, the top Democrat on the Finance Committee, said. “We’re in the midst of a global pandemic and once-in-a-lifetime economic crisis and the Trump administration is prioritizing boosting the president’s political prospects with shady cash.”

In a news release, the IRS said the "change will have no effect on transparency, as contributor information that is open to public inspection will be unaffected by this regulation."

The groups must continue to keep the names and addresses of major contributors in their own records, said the agency.

Tax-exempt groups organized under 501(c)(3) of the code, which can engage in limited lobbying, and Section 527 political organizations, which include candidate committees, will still have to disclose the names of major donors to the IRS.

Treasury and the IRS initially moved to do away with the requirement for 501(c)(4)s in 2018. But a federal judge ruled that the agencies had bypassed required rulemaking procedures. They subsequently issued a notice of proposed rulemaking in 2019, took comments and held a public hearing on the issue.